However, according to both firms, the deal is far from complete. Corus MD and CEO Kirby Adams said, “This is the first of several steps required to reach a definitive sale agreement in the coming months, which, with the anticipated cooperation of the government, employee representatives and the northeast community, should result in the restart of steelmaking on Teesside in the first half of 2011.”

TCP was partially mothballed in February this year, after a consortium of four buyers pulled out of a 10-year purchase contract with Corus, leading to a loss of nearly 1,500 jobs. The contract had helped Corus sell nearly 80 per cent of the plant's total output, which explains the need for mothballing when the deal was snapped. Between April and December 2009, TCP lost around £150 million due to the terminated contract. Corus said it would continue to pursue legal action against the consortium.

SSI proposes to continue to keep the 700 people in the plant and may hire a “few hundreds” more depending on market conditions. The plant’s capacity is around 3.2 million tonnes annually and SSI hopes to increase it to 3.5 million tonnes in the future.

Until 2008, when the plant was running to full capacity, it fetched Corus an estimated $1.5 billion in revenues.

The assets covered by the sale MoU include the Redcar and South Bank coke ovens, TCP’s power generation facilities and sinter plant, the Redcar blast furnace and the Lackenby steelmaking facilities, Corus said.

A sale agreement would also result in Corus and SSI operating Redcar wharf (TCP’s bulk terminal) as a joint venture, giving Corus the flexibility to use Teesside to serve its other steelmaking operations, while also meeting SSI’s requirements.

Win Viriyaprapaikit, President of SSI, said: “This transaction will enable SSI to fulfil its long-standing objective of becoming a fully integrated steel producer with both primary steelmaking and rolling facilities.”

Corus and SSI will continue their negotiations, as well as hold talks with trade unions and the UK government in coming weeks and months to finalise the terms of a sale agreement.

Thursday, August 19, 2010

Lower gains on the value of its fuel inventories and weaker refining profits led London Stock Exchange-listed Essar Energy Plc to post a 28 per cent drop in its half-yearly profits.

Essar, which raised $1.85 billion through its LSE listing this May, said the profit fell to Rs 519.7 crore from Rs 722.2 crore during the first half of 2009-10.

“Inventory gains led to lower profits. However, revenues were up for the six-month period due to increase in volume and higher prices in the refinery business,” CEO Naresh Nayyar told reporters in London.

The company reported an increase of 65.8 per cent in its revenues, at Rs 476.4 crore against Rs 287.2 crore during the first half of 2010-11.

In the next four years, Essar plans to increase its power generation capacity to 11,500 Mw from the present 1,220 Mw. Vice chairman Prashant Ruia said with an exception of one power project, Mahan 1, all its oil and power projects were on track in terms of time and cost. Mahan 1, is facing minor delays in the transmission lines, but it will be sorted without any financial damage he said.

Within a four-year time frame, the company is implementing 16 power and oil projects in the country, with a total capital outlay of around $10 billion, with an estimated $8 billion going into power sector and the balance $2 billion in fresh oil refining capacities. Of the projects, seven are new ones and the others are expansion of existing capacities in both sectors. Expanded capacities will stand at 11,470 Mw of power by 2014 and 18 million tonnes of refining capacity by 2012, against 1220 Mw of power and 14 mt of refining capacity today.

Ruia said that though no definite plans exist for ‘green energy’, the company hopes to get into the sector by setting up wind energy farms, as well as setting up hydel projects in the country.

It will also continue to scout for coal, oil and gas assets within and outside the country. “Talks with Royal Dutch Shell Plc to buy refineries in Europe are ongoing,” Ruia said. Essar has been in talks with Royal Dutch Shell to buy three refineries, two in Germany and one in the UK, for almost a year.

The company will also look for retail oil assets (network of gas stations) outside India, he said. “By next year, we will start exporting oil,” he said. By the end of this financial year, the company hopes to have 1,700 retail outlets and 3,000 by end-March 2012.

The company said that P Sampath, will be joining the company as its new chief financial officer, replacing Gerry Bacon from September this year. Bacon had joined Essar Energy in January this year and said he was leaving the company to pursue academic interests.

Tuesday, August 17, 2010

Tata Steel-owned Corus today said it will invest £185 million (Rs 1,355 crore) in the No 4 blast furnance at Port Talbot steelworks in Wales, that will increase capacity by 400,000 tonnes a year.

The company said the furnace will undergo a rebuild starting from July 2012. “The project will yield the additional benefit of balancing the iron and steel making capacities at Port Talbot, increasing the capacity of the two blast furnaces by up to 400,000 tonnes per year,” a release from the company said.

Corus’ outgoing MD & CEO of Tata Steel Europe, Kirby Adams said: “This investment is a major step in achieving Tata Steel’s ambition to position Port Talbot as a producer of high-quality strip products on a global scale and an internationally competitive cost base. Our capital expenditure decisions aim to invest in those who invest in themselves. As a result of this project the Port Talbot works and our downstream supply chain will be able, in the coming decades, to continue improving the quality of products and services provided to their UK and overseas strip product customers.”

Corus chief operating officer Karl-Ulrich Köhler who will become the CEO in October this year, said: “This is a major investment designed to provide Port Talbot No 4 with a long new campaign life of 20 years. The furnace’s energy efficiency and productivity will also be improved. Following this project and the rebuilding a few years ago of the No 5 blast furnace, Port Talbot will be equipped with two world-class iron making facilities.”

Corus is Europe’s second largest steel producer with main steelmaking operations in the UK and the Netherlands. Along with Tata Steel, the combined enterprise has an aggregate crude steel capacity of more than 28 million tonnes and approximately 80,000 employees across four continents.

Sunday, August 15, 2010

Tata Steel-owned European giant Corus has unveiled plans to construct a new £31.5-million manufacturing plant in northern England’s Teesside, which would potentially create 220 jobs. The site has been in the news for many months due to Corus’ decision to part-mothball a factory there.

Preliminary engineering work is underway at the Corus Redcar site to develop a new facility to produce steel foundation structures – called monopiles – used to secure offshore wind turbines to the seabed.

Chris Elliot, director of product marketing, said: “The UK government has approved ambitious plans to build thousands of wind turbines at sea over the next 10 years. They are intended to generate 35 gigawatts of electricity – around 15 per cent of the UK’s energy requirements. Similar developments are taking place in other European countries. In the UK alone, we estimate that about six million tonnes of steel will be needed over the next 10 years to make the foundations and tower structures for offshore wind turbines. We are positioning ourselves to take full benefit of these opportunities.”

The intention is to redeploy and re-equip redundant buildings on the company’s 3,000-acre Teesside site for monopile production and shipment of the structures which can weigh as much as 650 tonnes, a company statement said.

Corus MD and CEO Kirby Adams said: “This is one of a wide range of new employment and business opportunities which Corus is working on in Teesside. It also follows recent recruitment at our Hartlepool and Skinningrove plants, as well as at our South Yorkshire and Scottish plants.”

Jon Bolton, Corus’ long products director, said the company was moving to establish its position in this emerging market. “The development of a new plant is dependent on us securing enough orders for monopiles. Our engineers will be carrying out work in Teesside over the coming weeks to give us a head start on creating a new facility.”

The new investment plan is widely seen as a reprive for Teesside after Corus’ decision to part-mothball put nearly 1,700 jobs at risk. The company is currently in talks with Thai steel maker Sahaviriya Steel Industries (SSI). The status of the negotiations is not known. Tata Steel recently said it was waiting to hear from SSI.

More than six decades after the British left India, a new change is sweeping across company boardrooms in the UK.

A new generation of Indian expats top the list of non-British, UK-based company directors under the age of 30, according to a research.

The survey, commissioned by PR firm Eulogy! India and conducted by B2B customer information management company Blue Sheep, shows that Indian directors account for more than one in 10 non-British directors in the UK under the age of 30. The research analysed Companies House database, the UK government register of UK companies, and examined every single company, Eulogy! said. All limited companies in England, Wales, Northern Ireland and Scotland are registered at Companies House, an Executive Agency of the Department for Business, Innovation and Skills. There are more than two million limited companies registered in Great Britain. More than 300,000 new companies are incorporated each year.

The study, however, did not cover the extent to which Indians hold leadership positions.

Adrian Brady, CEO, Eulogy! London, said the study revealed the superior quality of graduates coming out of Indian universities and B-schools, their confidence and business acumen. Interestingly, the US does not figure in the top 10, even though it continues to be the number one investor in the UK. A recent report released by the UK Trade and Investment showed that in 2009-10, of the 1,619 new investments (projects) flowing into the UK, 484 were from the US, creating over 15,000 new jobs. India, with 91 new projects, is the fourth-largest investor in the UK behind the US, Japan and France.

The research also revealed that Indian expats account for eight per cent of directors between the ages of 18 to 25, and 12 per cent of those between 26 and 30, demonstrating that the young Indian entrepreneurial spirit is thriving in the UK.

Indian directors also share top billing with those from Ireland in the 31-35-year bracket, with both accounting for 10 per cent. In total, 69 per cent of Indian company directors in the UK are under the age of 40.

Rohan Srinivasan, director of Eulogy! India, said, “This research shows that there is clearly a new generation of young Indian entrepreneurs having a huge influence overseas.

Following David Cameron’s visit to India recently, this research reinforces why India is now seen as a vital regional and economic partner for the UK. It is one of the great business centres of the world, so it speaks volumes that companies there benefit so much from the ambition and drive of these young directors.”

Fresh from his visit to India in the last week of July, Britain’s Business Secretary (minister) said he was hopeful a buyer would be found for Tata Steel-owned Corus’ Teesside Cast Products (TCP) plant in the northeast of this country.

On his first visit to the region since being elected to power, Vince Cable said the company’s talks with Thai company SSI could bear fruit and steelmaking at the site (Redcar) could return to its original scale.

Since TCP was partially mothballed since February, around 1,700 jobs are at risk of being lost, a severe blow to the local economy.

Talking to BBC, he said, “I think potentially there is good news with the acquisition that is proceeding which will potentially re-open the blast furnace.”

He also welcomed an announcement by Corus that the scheme to help workers facing job loss at TCP had been extended for a further three months, until the end of November.

Cable’s visit to TCP, however, did not help in assuaging the local union members, who termed his visit a ‘mystery tour’ and said there was little information about the visit before it went ahead.

Community (union) general secretary Michael Leahy said, “We are extremely disappointed that Vince Cable has not addressed the biggest issue for Teesside – namely, how to restart steelmaking. Despite promising to engage with the workforce during the election campaign, his first visit to Teesside in the three months since the election was unpublicised, to allow the minister to avoid meeting those whose jobs are most at threat.”

He added: “Corus and the government appear to continue to drag their feet, while making little progress towards resuming steel production, which would give the biggest boost to the Teesside economy. The government must do all it can to ensure that TCP has a future. We believe the best chance of a future for Teesside steelmaking is for Corus to sell to somebody, such as SSI, that wants to make steel.”

In the last week of June, Tata Steel vice chairman B Muthuraman, on the sidelines of a CII-LSE conference in London, said the proposal for sale of TCP was under consideration by SSI and Tata Steel was awaiting a response.

According to its latest financial statements announced in May, Tata Steel Europe, reported positive Ebitda (earnings before interest, taxes, depreciation and amortisation) of $513 million (Rs 2,303 crore) in the second half of 2009-10, compared to an Ebitda loss in of $813 million (Rs 3,655 crore) in the first half of the same financial year. The company said turnaround had been achieved "primarily on account of a stronger order book, leading to higher capacity utilisation and lower costs in the second half of 2009-10”.

Earlier, Corus also said its MD and CEO, Kirby Adams, would be stepping down in October, handing over the reins to its current chief operating officer, Karl-Ulrich Köhler.

Wednesday, August 4, 2010

Indian information technology (IT) service providers Cognizant, TCS and Infosys have topped the latest ranking of service providers in Europe, in a survey done by EquaTerra, an IT advisory service provider.

In the Performance and Satisfaction (SPPS) study by EquaTerra for 2009-10, Cognizant has captured the first position, with a 79 per cent score. TCS and Infosys have taken the third and fourth position, with 75 per cent and 74 per cent scores, respectively. The second place was taken by US company Compuctacenter, with 78 per cent.

The study evaluates client satisfaction by surveying over 2,000 client relationships from 750 top IT spending organisations across Europe, covering 12 countries. The ranking covers 25 IT service providers in all. Cognizant topped the rankings in seven of the eight parameters the study focused on. These include Relationship Management (actively managing the relationship at the operational and strategic levels), Innovation (actively identifying innovation opportunities), Transition (completing the transition successfully on time and budget and with the required functionality), Quality (meeting the service levels as set out in the Service Level Agreement), Price (charging for services in line with current market price) and Risk (shouldering reasonable commercial risk and making necessary investments to reduce it).

Jef Loos, director, EquaTerra, said this ranking, based on two-thirds of all IT deals in Europe, gives a near-accurate evaluation of client satisfaction. “We choose the clients and do cross-reference where the same client is serviced by more than one IT service provider,” Loos said.

He further said, “Cognizant had not one dissatisfied client, which makes the company the best performer among the top 25 IT outsourcing service providers that we evaluated.”

Apart from Cognizant, TCS and Infosys, the other major IT companies to appear in the top 25 list are Wipro (15), Mahindra Satyam (17) and HCL (18).

Francisco D’Souza, President and CEO, Cognizant, said,“Over the years, we have made significant investments in bringing our industry-leading, client-focused processes to Europe. Our high-touch relationship model, deep domain expertise and consulting skills, our unique reinvestment philosophy, and our ability to build strong multicultural teams around the globe have helped our customers navigate structural changes in the economy and their businesses, enabling them to stay efficient, effective and innovative.”